Rice University Study: Small Biz Rewarded by Facebook Fans

Small-business owners who are skeptical about Facebook as a marketing tool might want to check out a forthcoming case study from Rice University’s Jones Graduate School of Business. Last year, professors from the school teamed with a local restaurant chain to see whether having a presence on the social network would have any practical impact on business. The results strongly suggest that it did, though only with a select group of people.

The school’s partner in the experiment was Dessert Gallery, a bakery and café chain in Houston that had no previous social media presence. Before launching the store’s Facebook page, the school surveyed nearly 700 of the chain’s regular customers. Those same customers were invited to become fans of Dessert Gallery on Facebook once the page was created. Seventy-five of those respondents accepted.

Dessert Gallery wasn’t shy about using its fan page once it was launched. The store updated the page several times a week with everything from pictures of its baked goods to contests to playful promotions.

“The owner’s name is Jennifer, so we would give cookies or cakes to anyone named Jennifer,” said Utpal Dholakia, associate professor of marketing at Rice University. “Just some ways to engage people.”

After three months, the school once again surveyed the respondents. It turned out that Facebook did have an appreciable impact on their behavior. Dessert Gallery’s Facebook fans visited the stores 20 percent more often than non-fans and spent 33 percent more overall. They didn’t spend more money per visit than non-fans, but they did spend 45 percent more of their dining-out budgets at Dessert Gallery.

The fan page seemed to yield intangible benefits, too. Dessert Gallery fans reported a greater emotional attachment to the brand: 3.4 on a four-point scale, compared with 3.0 for non-fans.

The authors of the study, which inspired an article in the March issue of The Harvard Business Review, called the Facebook page a success, but a qualified one, seemingly better used for niche marketing than trying to reach large, general audiences.

“The fact that only about 5 percent of the firm’s 13,000 customers became Facebook fans within three months indicates that Facebook fan pages may work best as niche marketing programs targeted to customers who regularly use Facebook,” Dholakia said. “Social-media marketing must be employed judiciously with other types of marketing programs.”